Google warns against higher tax bill

Google Australia managing director Nick Leeder has broken his silence on how much tax his company pays and has warned that increasing tax rates for international technology companies could cut investment.

Mr Leeder’s first comments on the issue come after politicians from the federal government and the opposition criticised the fact that the US-based company paid less than $75,000 in local tax despite winning estimated revenue of $1.1 billion from the Australian advertising market during 2011.

The company generates revenue and profits by charging Australian clients for internet ads but avoids local taxes by processing the payments in countries with lower tax rates, including Ireland.

“We do pay our taxes and we pay in every country," he said. “I think it’s a big ask to ask a company, one individual, to pay more tax than it’s required to by the law. I mean it’s just not fair."

In late May, Communications Minister
Stephen Conroy
said tax-base erosion was a problem and technology companies such as Google had to pay their fair share. He said new transfer-pricing legislation tabled by the government would address the issue.

“I’m also concerned Australian media companies are losing revenue to competitors who, while delivering services directed at Australians and thoroughly ‘present’ in Australia, pay very little tax," he said.

But Mr Leeder said politicians had to consider tax as a global issue and warned that overtaxing corporations could lead to companies reconsidering where they invested.

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“I think the rules about taxation are best left to the government," he said. “But I think it does all fit within a global arrangement between countries about taxes and I think that’s the layer you have to look [at] if you want to engage in those issues.

“With big global companies and taxes, there’s a nesting issue with how countries position themselves . . . that has to be considered."

But Greens communications spokesman Senator
Scott Ludlam
said the excuse of nesting issues was a thinly veiled threat akin to bullying. “I don’t have a great deal of time for that rationale and we hear quite a bit of that from the mining industry," he said. “It’s “[That rationale] is just a form of covert bullying . . . and the tech sector does pretty well out of Australia because we’re a pretty connected society," he said.

Other tech companies, including IBM and Dell, have defended the amount of tax they pay in Australia. “The revenues are here, they have a good corporate name here and I think threats of tax avoidance offshore don’t play particularly well," Senator Ludlam said. Labor MP
Ed Husic
has said he expects the issue of taxes paid by global technology companies to be brought up during a parliamentary inquiry into IT pricing.